I know this is beginning to sound like a broken a record but I have no choice than to keep playing it. The naira as you know it is under immense pressure and more and more analysts are predicting a huge fall anytime soon.
An article from Reuters quotes analysts who believe “Plunging oil prices, terrorism and messy pre-election politics are setting the stage for a rough time for Nigeria’s battered currency” as some see the currency highly vulnerable to attack from speculators.
The articles quoted analysts who sighted our fast depleting reserves (which is at a four month low) and dwindling oil recenue as a sign that the CBN may not be able to hold the currency together any longer.
“The markets are starting to see the blood here,” said Emad Mostaque at Eclectic Strategy, a consultancy set up by former Deutsche Bank veteran John-Paul Smith.
“We are now entering a particularly dangerous period for the naira as time constraints and low resources to fight against speculative attack make the currency vulnerable,” he said. “Everything is lining up for that currency attack.”
This fear basically explains why the stock market lost the most since 2009 as foriegn investors flee believing that the naira might depreciate further.
The question is no longer whether the naira will be devalued its basically when.